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Starcom's Paul Kasamias on TikTok Ecommerce, Airbnb, and US Digital Ad Spend

The MadTech Podcast

On this week's episode of The MadTech Podcast, Paul Kasamias, managing partner at Starcom, joins ExchangeWire's Grace Dillon and Lindsay Rowntree to discuss the latest news in ad tech and martech.

Together, they discuss:

 

- Short-form video sensation TikTok are trialling in-app sales in Europe. The feature, which is currently being tested with streetwear label Hype, seeks to replicate the success of TikTok’s Chinese counterpart Douyin, which generated USD $26bn (£18.5bn) from in-app sales within the first year of launching an ecommerce offering.

TikTok have promoted shopping campaigns in the region in the past, but the ongoing project indicates an ambition to make ecommerce a permanent part of the platform. The move reflects the determination of the app’s parent-company, ByteDance, to stake a claim in China’s thriving, USD $1.7tn (£1.2tn) ecommerce market. According to a report from Bloomberg, the Beijing-based business aspires to draw in USD $185bn (£131.8bn) from digital shopping by 2022.

It remains unclear when the offering will launch, with Bloomberg reporting that “The prototype so far is only visible to select participants and it remains unknown when the company will kick off the formal launch.” It’s expected that the offering will bring TikTok into fiercer competition with fellow social media heavyweights, namely Facebook-owned Instagram, who have long been developing their own in-app shopping capabilities in an attempt to tap into the USD $5tn (£3.6tn) global ecommerce market.

 

- Airbnb reduced the amount they spent on marketing in the past year from USD $1.14bn (£803m) to USD $482m (£339.6m). The company revealed in a stock market filing that they had cut total marketing spend for Q1 2021 to USD $98.6m (£69.5m), 45% lower than the USD $119.2m (£84m) in Q1 2020. Revenues for the period, meanwhile, rose 5% to USD $887m (£625m).

The lowered spend came mainly from “a reduction of performance marketing, partially offset by an increase in brand marketing” following the rental firm’s biggest global campaign in the last 5 years. Airbnb also reported that “unpaid or direct” made up 90% of traffic in the first 3 months of 2021.

The results reflect Airbnb’s pandemic-driven pivot away from performance marketing. CFO Brian Chesky told investors in February that the company would “never” spend as much as they did before the pandemic, having found that online traffic was at 95% despite performance marketing being at zero. CEO Dave Stephenson asserts that the company began the change in tact before COVID-19, with the pandemic accelerating the shift. Having gone public at the end of last year, the company have said they plan to “materially increase our market efficiency” over the course of the year.

 

- The Q1 2021 Digital Marketing Report from customer experience agency Merkle found that US ad spend increased across most categories during the first 3 months of the year. January experienced a particularly strong increase in ad spend (33% YOY) as brands looked to take advantage of heightened consumer demand. With retailers encountering fewer shipping and inventory challenges, retail click growth also picked up.

The report’s findings on Google include that spend on paid search rose by 20%. Spending by travel brands rose by 5% YOY, while click declines dropped to 10% from 14% in Q4 2020. Retail and consumer goods benefited from increased ecommerce demand, reporting higher clicks, spend, and CPC. 59% of Google’s organic search visits to brands’ websites came from mobile and tablets, a slight dip from the 62% in Q4 2020, and organic mobile share remained lower than paid mobile share for the tech giant.

For Amazon, clicks on their new Sponsored Brand ads grew 38%, with spend rising 26%. Opening new placements for the format over 2020, Amazon saw impressions soar 113% YOY, yet sales failed to keep up with click growth. Despite achieving more sales-per-click, Sponsored Products’ YOY click growth grew by only 11%, whilst YOY spend was almost flat due to a 10% decline in CPCs. However, sales growth remained strong at 36%, and Sponsored Products outperformed Sponsored Brands and Sponsored Display in terms of investment.

Despite higher investment, impressions grew only slightly on Facebook, pointing to an increase in competition and rising CPMs. A more cost-effective CPM (down 5%) made Instagram more popular with brands, with ad spend increasing 58% YOY and 30% quarter-over-quarter. Pinterest and LinkedIn saw positive levels of investment, whilst ad spend on Snapchat lowered significantly and Twitter were edged out of advertisers’ top 3 social platforms. Emerging digital channels, such as CTV and audio, accounted for an average of 33% of media spend in Q1 amongst brands who invest across multiple digital channels with display and social.